Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
If you want to grow big, you've got to have focus. Stick to what you're best at, business experts advise.
Adam Scheuer's company, Tiger Purification Systems Inc., is struggling with that concept. The Burnaby, B.C., firm sells water purification products and services to clients in the residential, commercial and industrial spheres.
Trading under the name Watertiger, it started off by focusing on the residential market. It mostly designs, fabricates and customizes systems made up of other manufacturers' products, says Mr. Scheuer, its president, who took charge of the firm in 2003 when it was spun off from a mechanical contracting business run by his father, Wilf Scheuer, who today serves as vice-president.
"Over the years we've very aggressively pushed into more commercial-industrial type markets," Mr. Scheuer says, citing projects such as hospitals and mine remediation.
Watertiger has four employees and services some of its clients on an annual basis. Besides exporting systems to more than 40 countries, it has supplied one to the National Aeronautics and Space Administration, which used the unit in zero gravity as part of a project related to manned Mars missions.
Back on Earth, Watertiger is considering its next move. After enjoying 40-per-cent, year-over-year revenue growth between 2003 and 2009, it took a hit in the recession, Mr. Scheuer says. The company has regained that lost ground, but it has never moved to the next level, he says.
He envisages Watertiger having between 20 and 40 employees if it can expand nationwide and get into bigger-picture design services. "I see us being a bigger player in the market rather than just sort of a local dealer."
Lack of focus may be an obstacle. "One of the problems that we face is we are so scattered, because we feed into so many different markets, so many different applications, so many different products," Mr. Scheuer says. "That's always a hurdle to taking that next step up in size."
Then again, Watertiger can't afford to abandon the residential projects that have long paid its bills.
"We don't want to let go of the residential work because we don't have enough of those big, juicy projects on the commercial side," Mr. Scheuer says. Also, securing commercial work comes with higher marketing costs, he notes. "How do you fund that commercial expansion?"
The Challenge: What's the best way for Watertiger to expand?
THE EXPERTS WEIGH IN
Kelly Askew, managing director for retail, Accenture LLP, Toronto
Smaller, growing firms need to have laser focus when they're spending their marketing dollars. So a shotgun approach of going after a broad set of business customers is going to be challenging because they're not going to be able to spend enough to get registered on the consciousness of those organizations. So they need to be very focused on the specific type of commercial clients they want to have, and spend time and know those customers so they can tailor their marketing message and their sales approach.
Given the fact that they spend a lot of time with their residential customers, that's the base I think they should continue to focus on. Having a secondary focus on an industrial or commercial market is one way to expand scope, but they would need to make sure that didn't take away from their residential customers.
If they did want to expand into the B2B market, I would suggest looking at channel partners. Find other organizations that are serving these B2B customers through energy or other utility products and investigate the potential of partnering with one to help sell through their product.
If their intent is to expand rapidly, I think external funding is a must-have. However, if they're a family-owned business that's pretty comfortable with moderate growth, then getting that laser focus and improving the basic fundamentals within one customer group will allow them to generate that cash stream that can then fund focus on subsequent customer groups.
Anthony Taylor, principal consultant, SME Strategy, Vancouver
My instinct is to say, "Look at what's most profitable for your company and stick with that." Or what are you most known for? Or what can you be the best in the world in?
Where do you see your company in five years? What does success look like? Maybe it means having X number of employees. I don't necessarily think that employees are a good measure of success. I would say total revenue or total clients served or total projects created would be a better measure.
Then figure out what your company is designed to do. So if it's, "Watertiger is making the best water filtration systems in the world for residential and commercial use," then you would say, "Which business lines are going to help you achieve that goal faster?" You could probably chop off half of your products and create additional efficiencies, whether in revenue or production.
Mark Kerbel, co-founder and executive vice-president of business development for the wireless energy-management technology provider Regen Energy Inc., Toronto
Have a look at what you're offering, not just the product but the product and the service. Which offers the biggest bang for the buck? I would highly recommend you look at The Innovator's Solution, a book that contains a lot of the principles that [Harvard Business School professor] Clayton Christensen has espoused about innovation, where it's not just a matter of "do you do it cheaper than others." It's where you have a breakthrough, where you allow a customer to do something they can't right now because of both cost and complexity.
Especially in the commercial world, and industrial too, there are one or two or more layers of the equipment manufacturer and vendor down to the end customer. You really need to understand that distribution channel: different models, different geographies, different types of customers. Take what you think are the top three distribution models that would work for you.
You've got short-term residential revenue that's smaller, and commercial and industrial profit opportunities, but you have to invest more time. There's no one way to do it – you've got to juggle both. I realize you're only four people, but try and have certain people focused just on one and others just focused on the other. Say, "Look, this is my primary job. I'm going to spend at least 75 per cent of my time on this market."
THREE THINGS THE COMPANY COULD DO NOW
Stay focused on residential customers
Meanwhile, increase your B2B footprint by finding channel partners and targeting specific groups of commercial and industrial clients.
Identify what adds the most value
Which of your offerings let customers do something that's otherwise too costly and complex?
Stick to North American market
Tackle overseas expansion when you have more capital.
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Interviews have been edited and condensed.